Shell Pakistan is facing suspension of its licence in the country for failing to pay about Rs 260 million compensation to the victims of the devastating oil tanker fire that killed 220 people, according to a media report.

Pakistan's Oil and Gas Regulatory Authority (OGRA) had ordered the local subsidiary of Royal Dutch Shell to pay a penalty of Rs 10 million for June 25 oil tanker fire tragedy near Ahmedpur East.

In addition, the regulator ordered the company to pay Rs one million in compensation to the families of each of those killed and half a million for each person injured.

The firm yesterday paid Rs 10 million penalty. However, the payment was immediately rejected by the regulator, saying it was partial compliance of its order that also required the company to pay compensation to families of the victims.

"This is only a partial compliance and we reject it," a spokesperson to the regulator, Imran Ghaznavi, was quoted as saying by the Dawn.

He said the payment of penalty would not be considered full compliance with its orders unless the oil company made full compensation to affected families within the stipulated deadline which expires today.

"OGRA will proceed under the rules and laws in case the company fails to ensure full compensation to affected families. In case of non-compliance, OGRA may impose Rs 1 million per day or revoke the marketing licence," he said.

Earlier, the company said it would pay the fine imposed by OGRA to comply with the regulator's directive, but it has right to contest it.

It said the matter was under investigation, and the company would decide on the appropriate course of action once more information was known and investigations concluded.

"We are discussing with Ogra the appropriate means by which this financial assistance can appropriately reach the injured and the families who have lost their loved ones," Shell said.

On July 7, OGRA held Shell Pakistan squarely responsible for gross violation of laws, rules and standards in oil transportation resulting in June 25 tragic accident.

The regulator claims the tanker was not fit to transport oil and that the driver's license was invalid.

The Lahore High Court has also taken up this matter and directed the government to suggest penalty on the Shell Pakistan.

In its reply last week the government had suggested Rs 500 million on it.

The oil tanker carrying some 50,000 litres of fuel from Karachi to Lahore had crashed on a highway in central Punjab province.

After the fuel tanker crashed and started leaking, hundreds of villagers from a nearby village rushed to collect the spilled fuel, despite warnings by the driver and police to stay away.

The tanker exploded minutes later, killing 220 people, in one of the worst accidents in Pakistan's history.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)